... An Evaluation of the Business Peliormance of Fishery Cooperative Societies .in Vasai Taluka of Thane District) Maharashtra

SMITHA R. NAIR, S.K. PANDEY" ARPITA SHARMA & SHYAM S. SALlM*

Abstract

F ishery cooperative movement is considered to be the most effective way to develop the fishery industry and improve the standards of living

of the poor fishermen. It is also viewed that fishery cooperatives could spare from the exploitation and improve their socio-economic conditions. Efforts made in this direction have yielded goods results in some areas, but the overall picture of fishery cooperatives is not encouraging. It is therefore required to strengthen fishery cooperatives and revitalise their activities. There is a need to create an economically viable, technically sound and professionally managed fishery cooperative which should be capable of

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JANUARY 2007 225

providing genuine support to fishers. The present study is conducted in Vasai taluka of Thane district, Maharashtra to evaluate the performance and their role in fishery cooperatives in terms of their business activities. Ratio analysis technique was used to evaluate the business performance or primary fishery cooperatives of Vasai taluka. Result $howed ~hat gross profi ratio and operating ratio of majority of societies are unsatTstactory whereas net profi ra:~lo and efficiency ratio are satisfactory In most of the cases.

Introduction

Fishermen community in India is amongst the weakest sections of the community. Illiteracy, poverty, and lack of knowledge of latest technologies are major contributing factors to their retarding socio-economic growth. This vicious circiL is further strengthened by lack of institutional support both in infrastructure and finance. Consequently, middlemen who act as money iendersftraders subject fishermen tp explo;ta;tion. Fishermen discovered thatt.he cooperattlves could save them from the exploitation and Improv~ thei r sQcio··economic cQnditlons.

The fishery cooperatives have made impressive progress particularly after introduction of Five Year Plans. There had been remendous growth In establishment of different levels of cooperative societies, in India. The most common structure of fishery coopergtives in different states of India is three tier, starting from primary cooperatives at village level, central federations of district/regional level, apex federation at state level and FISHCOPFED at national level (Mishra, 1997). Presently, there are one National ' level federatIon, 17 state level federations, 108 central level federations and 12,427 primaryfisnerysocieties function ng thrtll.lghoU ~ndia (Tewary.2000,.

While the co·verage· of. cooperatIves tias been QU ite encouraglng because of governmental support., there are very few we-lI ·organized and mana-ged coopemtive unf s in th is field. Efforts made tn establishing cooperatIve societies have yielded good re.surts In some areas bu the overall picture of fishery cooperative SOCieties in throughout h:1dta is notenoouraging (Prakash, 2000). A major cause of collapse of cooperative movement in fisheries is the absence of effective management (Annamalai, 1996).

In the present era of competitive economy, the concept of management has gained predominance. Therefore the emphasis has been on self-reliance and ability to compete, resource mobilisation, professional management, trained and strong workforce. access to incifganous marketfng channe ls as well as global market and ·eff·ective financial management Professional management would ensure higher level of productivity, bringing

... .

226 INDIAN COOPERATIVE REVIEW

about a higher rate of economic growth and higher standards of living for the fishermen.

In view of the above facts, an attempt has been made to evaluate the performance of primary fishery cooperatives and also to identify the constraints that are affecting to their business activities . The objectives of the study are as follows:

• • •

to evaluate functioning of fishery cooperatives in Vasai taluka.

to examine the financial performance of fishery cooperatives.

to find out the constraints involved in the management and operation of societies

Methodology

The study was conducted among eight fishery cooperatives of 11 existing primary cooperative societies in Vasai taluka of Thane district. Quantitative data were collected from these societies with the help of a structured interview schedule and referring to last 3 years (2000-01 to 2002-03) financial. Ratio technique was used to study financial performance of fishery cooperatives.

Ratio analysis is the process of determining and interpreting numerical relationship based on financial statements. Profitability ratio measures overall performance and profit earning capacity of business. They reveal total effect of business transaction on profit position of the enterprise and effic iency of firm as a whole. The following ratio have been used for the evaluation of business performance of societies:

Gross Profit Ratio (GPR) shows the relationship between the gross profit and net sales and is generally expressed in percentage.

Gross profit GPR= x100

Net sales

Operating Ratio (OR) is calculated by dividing the total operating expenses by net sales and is expressed as percentage. Total operating expenses include all costs except financing costs and income tax. This is the most general measure of operating efficiency and is important to management in judging its operations.

Total Operating Expenses OR= x 100

Ne Sales

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Net-Profit Ratio (NPR) .is determined by relating the net income after taxes to the net sales for the period and measure the profit per rupee of sales. This percentage in conjunction with the operating ratio throws light on the importance of organisation's non-operating activities.

Net profit NPR= x100

Net sales

The efficiency of operation of an enterprise can be judged by Efficiency Ratio (ER) by relating total sales and final inventory at the end of the year. The ratio is calculated as :

Total sales

Ending inventory

Garrett ranking technique was used to analyse the oonstra~nts faced by the fisheryoooperatrve in Thane dIstrict. The respondents were asked to rafll< the factors that are limIting the perlormance of societies. viz, availability of resources, lack aI-organisational skill and know how, lack of t~aining. lack of fund, dominance of middlemen, lack of cooperation among members. The order of the merit given by the respondents was changed into ranks using the following formula:

100 x (Rij - 0.50) Percent position = . ---- --

Nj

Where RiJ = Rank given for the ith item by j individual

NJ = Number of items ranked by jth individual

The percent position of each rank was converted into sores by referring tables given by Garrett and Woodsworth (1969).

Details. of activities and functioning' of cooperatives and constr,ainlS facing.wta!re, cO:lteGted through interviews with the cha.irmen, secreraries, and members of these cooperatives and analysed the same.

Results and Discussion

Fish and FisheriesofVasai taluka:

Vasai is a well developed and a prominent marine fishing center in Thane district of Maharashtra located 50 Km. away from Mumbai on the western railway. The shore length of the taluka extends from Naigoan to

228 INDIAN COOPERATIVE REVIEW

Arnala and Fort. There are seven fishermen villages in the taluka. According to the Census Report of Department of Fisheries, Government of Maharashtra, 1997, the population of active fishermen is reported to be 5007. There are 735 motorized boats in Vasai taluka.

The main gears operating in this area are gill nets,and dol nets. The main fishery of Vasai taluka is Kav fishery and oper~tedup to a de~th of 10-20 fathoms from Bombay high to Jafrabad. The Important species caught in Vasai zone are Bombay duck, shrimps, ancheviella, dracons and

catfishes .

Vasai zone with a production of 32,643 tonnes had contribut.ed .to the tune of about 32 percent of the total marine fish landing of Thane district in 1995-96, which has come down to about 9,943 tonnesby the year 20?2-03. This decline is mainly due to overexploitation of fish and lo~s o! fish stock due to increasing pollution level in the area. Though, Vasal . bemg a coastal taluka is dominated by marine fishery, fish culture practices are also followed in brackishwater arid freshwater areas.The available brackish water area in the taluka is 988 ha. off which 75 perceritarea used for farming. Shrimp farming is mainly carried out is these brackishwater areas. There are about 130 village ponds in Vasai taluka. The main species cultured are

catla, rohu , and mrigal.

Fishery Cooperatives in Vasai taluka :

There are 11 primary fishermen cooperative societies in Vasal taluka, off which 8 have been selected for present study. Allsu rveyed societies are actively engaged in mariine fishing and other allied activities and their names

are as follows :

1.. Vasai Macchimar Sarvodaya S~hakari Sanstha Ltd.

2. Vasai Sahakari Koli Macchimar Sahakari Sanstha Ltd.

3. Vasai Taluka Macchimar Sahakari Sangh Ltd.

4. Naigaov Macchimar Vividh Karyakari Sahakari Sanstha Ltd.

S. .Kochivada MacchimarVividh Karyakari Sahakari Sanstha Ltd.

6. Arnala MacchimarVividh Karyakari Sahakari Sanstha Ltd . .

7. The Arnala Fishermen Sarvodaya Sahakri Society Ltd.

8. Daisarang Macchimar Sarvodaya Sahakari Sanstha Ltd.

Functions of Fishery Cooperatives:

The primary fishery cooperatives in Vasai play a very important

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role in fulfilling the needs of fishermen. These primary societies are affiliated to the Central Society, Thane Zilla Macchimar MadhyavartiSahakari Sangh Ltd, Palghar, Thane. It serves as liaison between primaries and apex body,' Maharashtra Rajya Macchimar Sahakari Sangh Ltd.', which is situated in Mumbai. The district level federations as well as primary societies are affiliated to the apex society. The main functions of the primary societies in Thane district are as follows:

1. Coordination and lending of credit facilities from various institutions -These societies procure the credit from National Cooperative Development Corporation (NCDC) and Thane District Central Cooperative Bank located at Palghar and Satpati . Societies recover loans from members' catch proceeds.

2. Transport, marketing, and storage of fish-Most of the studied societies have ice plant and cold storage facilities for the storage of fish. Marketing of fish is expected to be an important activity of such societies and majority of the surveyed societies are engaged in marketing . One society namely 'Vasai Taluka Macchimar Sahakari Sangh Ltd.' is engaged fully in marketing .

3. Supply of ice, dieset, rope, and other fishery r equisites· Majority Q

societies have undertaken supply 0 nylon twine, ropes, nets, dieset, oil' etc., engine spare parts, and other fishery requisites at subsidised rates to the fishermen.

4. Supply of consumption items through shops- Most of the societies are supplying consumption items through their gain shops.

5. Arranging tra 1 nlng • T hese societies ar~arran9jng Tishe rmen . raining lo t a period of six mon hs for therr m£;lmbers every year from Frsherles ralning Center located at Vasal. The board members and staH uSLlaJly ge

management training training from Cooperative Training Institutes, Pune.

6. Insurance for boats and life and help from Distress Relief Fund -Considering the risk and uncertainty involved in this sector, there are number of schemes providing assistance to fishermen in case of any eventuality. The important one is the Centrally Spons'ored Group Accident Scheme lormulated by Nat~onal Federation of Fishermen's Cooperative-s ltd.

IS HOOPFEO)_ Central government and State goveromentoontrlbute in premium paid by individual fishermen.

Supply of margrnal profit to member fishermen - Every year profit ma,king societies aTe expected to give dividend to heir members out of the net profit earned. The dividend ranges from 12-15% of the net profit. Out of Iheeight societies surveyed except one, all are running in profit.

230 INDIAN COOPERATIVE REVIEW

8. Welfare and charitable services - Most of the societies are spending money for welfare and charitable services like education, marriages, building etc. for common use out of the net profit earned in each financial year.

Ratio Analysis:

1.. Gross-Profit Patio (GPR)

The ratio is of vital importance for evaluation of business results. A profit of at least 9 percent of net sales is considered to be- ideal range. The average gross profit ratio of last 3 years of 5 societies is foundto be above 9 percent. While remaining five societies GPR is less than 9 percent. The study found that for majority of societies gross profit ratio is far below than the ideal norms. This indicates that low profit margin for the societies. The gross profit can be increased either by reducing the costs of goods sold or by increasing sales. for better financial management the societies ought to have improved its financial position significantly to enhance its financial strength.

2.. Operating Ratio (OR)

This is the most general measure of operating efficiency and important for management in judging its operations. Operating ratio ranging between 75-85 percent is considered to be ideal. The study reveals that none of the societies comes under the accepted norm of 75-85 percent. The costs of goods sold plus expenses are more than sales or nearer to sales in all the societies. The high ratio for all most all the societies in the last 3 years shows lower operational efficiency. Therefore, due attention should be given to change this. business situation into favourable one. The management should be given to change this business situation into favorable one. The management should take proper steps to control or eliminate wasteful expenditure in future to strengthen its operational efficiency.

3. Net Profit Ratio (NPR)

It is determined by relating the net income after taxes to the net sales and measures the profit per rupee of sales. This percentage in conjuction with the operating ratio throws light on the importance of an organisation's non-operating activities. A net-profit ratio ranging from 0.5-1.0 is considered to be ideal. It is found that out of 8 societies studied, no societies come within the ideal range of 0.5-1.0 percent. The ratio was negative for one society, namely 'Vasai Taluka Macchirnar Sahakari Sangh Ltd.' which indicates that the society is running in losses. For other seven societies the ratios are above one which indicates a satisfactory picture as far as the net profit ratio is considered.

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4. Efficiency Ratio (ER)

The efficiency of operation of an enterprise can be judged by relating its total sales and final inventory at the end ofthe financial year. The efficiency ration is expected to be in between 9-12 times of the ending inventor. The following table indicates the efficiency ratio of surveyed societies.

Table ·~ 1

Efficiency Ratio (Average of last 3 years)

SI. No. Efficiency Ratio (%)

Less than 9

Number of Societies

1. 2. 3. 4.

9 -12 Above 12

Total

1 2 4 7

For four primary fishermen societies the ratio is above 12, off which two societies come under the ideal norm of 9-12 percent. Here the sample size for study is 7 as one society 'Vasai Taluka Macchimar Sahakari Sangh Ltd.' reported no inventory for last 3 years, primarily being a marketing society. Thus except one society the ratio is favourable to all the surveyed societies. .

Constraint Analysis

There are number of factors responsible for poor performance of the majority of fisheries cooperatives societies in India. Garrett's ranking technique has been used to analyse the constraints faced by the fishermen cooperatives in Vasai taluka. The following table shows major constraints faced by the marine societies in the order of priority.

SI. No.

l.. 2. 3.

4. 5,

6.

Table 2

. Constraints Experienced by the Fishermen Cooperatives in VasaiTaluka

Constraints Score

Lack of resourceslinfrastructure facilities 67 Dominance of middlemen 62 Lack of training 52 Availability of fund 51 Lack of organizational skill and know-how 42 Lack of cooperation among members 31

Rank.

i

2 3

4 5

6

.. 232 INDIAN COOPERATIVE REVIEW

The study revealed that the major problem affecting the societies is the lack of resources mainly less catch from the sea and lack of infrastructure facilities. This is mainly due to trawling operation in the coastal waters by mechanized vessels. The second problem as reported by members of the societies is the involvement of middlemen in marketing. The middlemen acs as money lenders/traders and take their fish catch at vary low rate that. The inadequate among of credit, problems of preservation, transport and marketing have increased the influence of middlemen and eventually make the fishermen indebtness.

The third major problem is the lack of proper training especially to board members and staff members. This is . mainly due to the lack of awareness of the board members and staff about the need for training and lack of collaborative relation with cooperative training institutions. The fourth major constraint is reported to be the availability of finance. Inadequate institutional finance has been hindering the effective performance of fishery cooperatives. This is mainly due to lack of coordination between financial institutions and cooperative organizations.

The fifth problem as faced by the cooperatives is the lack of organizational skill and know-how. This is mainly because of lack of experienced personnel having skill in management, supervision, accounting, auditing, record keeping etc. Lack of cooperation among members ranked as last (6th) among all listed problems.

In view of above results and discussion, it is therefore required to take necessary steps to improve the functioning and business performance of fishermen cooperative societies. In order to provide sincere support to fishermen and to develop fisheries sector, it is essential to organize techno­financially feasible and professionally managed fisheries cooperative societies.

References

Anil, S., 2003. Performance Evaluation of CDS's in Western Maharashtra. Cooperative Perspective, Vaikunth Mehta National Institute of Cooperative Management, Pune. 38 (3) : pp. 24-30.

Annamalai, V., 1996. Return of fishery cooperatives in maritime states of India. Fish Technology Newsletter, 2 (10&11). pp. 5-6.

Annual Report., 2003 Maharashtra Rajya Macchimar Sahakari Sangh Ltd., Mahatma Jyotika Phule market, Mumbai. pp. 4-28.

Annual Report., 2003. Thane Zilla Macchimar Madhyavarthi Sahakari Sangh Ltd., Palghar. pp. 6-33.

JANUARY 2007 :23'3

Fish production report, 1998-99 and 1999-2000, Government of Maharashtra; Mumbai (2002).

Garrett, H.E. and Woodsworth, R.S., 1969. Statistics in Psychology and Education. Vakils, Fetter and Simons Pvt. Ltd. Bombay. p. 329.

Galgotia, J.S., 1969. Role of cooperatives in Fisheries development of Maharashtra state. Indian journal of Agricultural Economics, 23(3). pp. 259-263.

Hand Book of Basic Statistics of Maharashtra State, 2000. Published by the Director of Economics and Statistics, Government of Maharashtra, Mumbai. pp. 80-107.

Karbhari, J.P', D.B.S. Sehra., and B.B. Bhatt., 1989. Working of Fisheries Cooperatives in Satpati. Fishcoops, New Delhi. 2(1) : .PP· 9-22.

Mishra, B.K., 1997. Fisheries cooperatives in India. Co-op Dialogue 7(2) : pp.1-8.

Phadtare, M.B., 2002. Status of fisheries development in Maharashtra. Fishing Chimes, 22(1). pp. 101-103.

Prakash, M., 2000. Role of fisheries cooperatives. Fish coops, 14(4) : 195-198. TewarYj M.M., 2000. Revitalization of non-viable/weak cooperatives with special reference to fishermen cooperatives. Fishcoops, 13(3). p. 5.